ICTworks by Inveneo

Article by G. Kofi Annan initially posted on the BusinessInsider website

A recent report by Dubai-based firm Delta Partners has put the growing telecom industry in Emerging Markets to reach $200 billion by 2013. In the white paper titled “ICT in emerging markets: a USD 200Bln opportunity that cannot be ignored.”, the telecommunications advisory and investment firm reveals that the ICT market in South East Asia, Middle East and Africa was worth $168 billion in 2009 at around 5% of the global market. The findings show that this is expected to grow by $60 billion until 2013 to $228 billion in 2013 – a large incremental growth opportunity.

“The size of the ICT opportunity is significant in all three regions and it is expected to grow rapidly at an annual growth rate of 8% in the next three years as markets mature and operators continue to embrace ICT and its potential,” says Dimitris Lioulias, Manager at Delta Partners. “The window of opportunity for aspiring telecoms operators however is narrow. Firstly, because competition is increasing on the access side and secondly, because IT players are moving aggressively to lock in long-term contracts those enterprise and SME customers willing to outsource a number of their networking and IT needs.”

Fueled by the influence of ICT on infrastructure in countries like China, Kenya, India, and Indonesia, analysts are increasingly encouraging multinational companies to engage the banking, public and telecommunications sectors in emerging markets for growth. About IBM's own outlook on ICT in Africa, country general manager for IBM East Africa Tony Mwai recently told Reuters, "We are seeing growth in the financial services sector, certainly in telecommunications because of the explosion of mobile technology and we are seeing growth in the public sector as governments transform toe-government type of operations and delivery of services to citizens,".

Report Overview:

• ICT is a global market worth more than USD 3 trillion and it becomes increasingly relevant for telecoms players, both as an offensive and as a defensive play
• The ICT offering can be broken down into six different categories of services, from more network centric (and hence more synergetic to pure Telco players) to more IT centric (and hence more synergetic to pure IT players). These services range widely not only in terms of revenue generation potential but also in terms of EBITDA margins (3-45%)
• The motivation of telecoms operators to enter the ICT battlefield has been varied depending on the type of player. The result, however, has been strategies that turn ICT into an important part of operators'; business
• In Emerging markets, the ICT opportunity is at different stages of development: In South East Asia, business process outsourcing is at the forefront of ICT services being provided. Operators are in some cases quite advanced as they started with their ICT efforts more than a decade ago
• In the Middle East, slow deregulation of the telecoms markets hinders strong development of ICT. Operators are in the process of building their skills and they use partnerships to achieve so
• In Africa, poor fixed infrastructure also affects ICT negatively. Operators try mostly to leverage their mobile assets to deliver ICT services
• The size of the opportunity in these Emerging markets is expected to reach USD 230 Bln by 2013. The window of opportunity for aspiring telecoms operators is narrow. Firstly, because competition is increasing on the access side. Secondly, because IT players are moving aggressively to lock in long-term contracts enterprise and SME customers willing to outsource a number of their networking and IT needs

Read the full report

Building on last month's amazing Skype Chat on Nigerian Internet Business Opportunities we're now going to look beyond any one country, and investigate business opportunity in East and West Africa:

1. How might Internet business opportunity and entrepreneurship be different in East Africa versus West Africa?
2. What could each region learn from the other?
3. And what can we do now to improve cross-Africa collaboration?

These are the questions we'll discuss in the next ICTworks Twitter Chat - a freewheeling conversation around our central questions on the Twitter platform.

We'll start at 14:00 GMT (your timezone) on April 22nd with introductions, then move into the discussion, using the #ICT4D hashtag in Twitter. Be sure to RSVP here.

You may want to use TweetChat as your Twitter client for this chat - we've found it to be worthy.

Our hope is to learn from each other and find ways we can increase Internet business opportunity and entrepreneurship across Africa.

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Be sure to follow ICTworks on Twitter and RSVP today!

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At the TandaaKenya conference, there was an interesting presentation around the Internet habits of Kenyans. The Study of the online life of Kenyans (2010) has a few key findings listed below:

Internet Usage:

• Internet motivated mainly by work related activities (as opposed to leisure)
• Internet use is currently dominated by knowledge seeking behaviour and communication, entertainment/media, leisure and commerce are opportunity areas
• On-line banking relatively under-developed
• Many Kenyans search for information on health and diseases on the internet

Learnings:

• Kenyan users become highly devoted to the internet
• High demand for more access
• Cost and speed still hindrances
• Towards mobile phone based browsing as opposed to cyber café
• Demand for better screens and mobile phone content

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Nigeria is the Giant of Africa, with 1/8 of its population and all the possibilities and problems that come with such size and diversity. It also should be the ICT leader for Africa.

Nigeria has the more mobile phone subscribers, at 68 million, than Egypt or South Africa. And more Internet users, 11 million, than South Africa, and almost as many as Egypt. But it doesn't have the buzz of either. In fact, it doesn't even have the buzz of Ghana or Kenya, which combined still do not compare with Nigeria's size. Why?

Explore the issues behind Nigeria's silence and the opportunities that do remain, at the next ICT4D Skype Chat:

• Nigeria Internet Business Opportunities
  ICT4D Skype Public Chat
  6pm, Lagos Time, March 26th
  (find in your timezone)

Like our Twitter Chats, this will be a freewheeling conversation around our central topic - Nigerian Internet business opportunities - using the Skype Public Chat function. Be sure to get Skype to join us as we discuss:

1. What are the online business opportunities in Nigeria?
2. Are they greater than in Ghana or Kenya?
3. How can Nigeria regain or extend her lead in online business?

This Skype chat will also feature four noted Internet experts discussing Nigerian Business opportunities:

• Loy Okezie of StartupsNigeria
• Oladejo Fabolude of Digital Crossings
• Sheriff Shittu O. of WebTrends Nigeria
• Oluniyi David Ajao of Web4Africa

So what are you waiting for? Put the ICT4D Skype Chat in your calender now!

I was perplexed at The 3 Reasons Why Kenya is Beating Nigeria in Internet Business Opportunities. Could the author Wayan Vota simply be courting controversy as a means of drawing traffic to the blog? I will attempt to review the reasons listed in the blog post as to why the author is of the view that Kenya leads Nigeria in Internet Business opportunities.

1. Safaricom

Safaricom? When did Safaricom start offering Internet connectivity over a 3.5G network? Only recently. As at the last time I was in Kenya (February 2010), Safaricom was still offering a special promotion of unlimited Internet access for only 9,999 Kenyan shillings with each subscription lasting only a week. The promo was obviously a means of raising awareness on its new 3.5G network.

In contrast, MTN Nigeria has been offering super-fast Internet over 3.5G since the 2nd quarter of 2008. In addition, Zain and Glo Mobile both offer super-fast Internet using 3.5G technology covering all the top cities in Nigeria.

Nigeria may have more mobile phone players, and cheaper voice rates, but their 3G data services are no where near the quality and reach of Safaricom.

I used Safaricom’s mobile broadband service in Nairobi and Mombosa and frankly speaking, I have experienced faster Internet in Nigeria and Ghana. Safaricom’s service is no where near excellent. It disconnected intermittently and I had reconnect manually on several occasions. I have been too busy since I got back to publish a detailed review based on about 14 days of using Safaricom’s mobile broadband.

An AccessKenya Fibre ad on a road in Nairobi Kenya

2. Seacom & Teams

Yeah. Seacom alone is a big deal. The hotel I lodged in Mombasa offers Internet connectivity using Swift Global. Swift Global is linked to Seacom. The speed was simply wickedly fast. Seacom was launched July 2009 and currently has an operational capacity of 100 Gbit/s. Considering Kenya (and the whole of East Africa) got their first taste of real Internet only recently, they still have some catching-up to do compared to their West African cousins.

Nigeria’s telecom sector is years behind. Yes, the Glo cable is coming, but with the current restrictive regulation, I bet it will still be cheaper for Nigerian companies to buy bandwidth microwaved over from Benin.

Really? The assertion by Wayan is highly inaccurate. Nigeria is presently the leading telecoms market in Africa with the most liberal telecom regime where several players are digging it in a highly competitive & dynamic market using various technologies. Nigeria is where GSM meets CDMA. Where 3.5G knocks head with EV-DO. Nigeria’s telecom not only offers a big basket of flexible options but is also the biggest in Africa.

Nigeria has been served by the SAT-3 cable (whether directly or via Benin Republic is inconsequential in this context) since 2002. SAT-3 has a capacity of 120 Gbit/s; however, plans are in place to nearly triple SAT-3’s capacity to 340 Gbit/s soon thanks to technological advancements allowing 2.5 Gbit/s wavelengths to be replaced with 10 Gbit/s wavelengths.

Wayan wrote about the Glo-1 cable with a heavy dose of pessimism. Glo-1 is powered by Globacom Limited, a privately-owned commercial entity. I wonder what “restrictive regulation” would stop Glo from pricing its broadband services competitively. Already, Glo Mobile recently announced new mobile broadband packages offering much more data for the same old price, leaving its competitors to play catch-up.

Wayan forgot to mention that MTN Nigeria (a private entity) recently won a bid for the rights to SAT-3 and by inference, the submarine cable would witness a much better management in Nigeria.

Wayan conveniently excluded Main One, another privately-owned submarine cable that is set to be launched soon with an initial capacity of 1.28 Tbits/s serving Nigeria and some other West African countries.

Yet another cable is ACE. ACE (Africa Coast to Europe) submarine communications cable  is a planned cable system along the west coast of Africa between France and South Africa. Etisalat Nigeria (a Nigerian telecom operator) is part of the ACE consortium. ACE would become operational in 2011 with a minimum capacity of 1.92 Tbit/s.

Some vital stats

• Nigeria: 11,000,000 Internet users as of Jun/09, 7.4% of the population, per ITU.
  Population: 154.7 million (UN estimate).
• Kenya: 3,359,600 Internet users as of Jun/09, 8.6% of the population, per ITU.
  Population: 39.8 million (UN estimate)

3. Kenya Power & Lighting

If there is any single factor that would be the albatross of e-commerce development in Nigeria, it would be the lack of power. However, I am forced to reflect in this direction: if Nigeria could achieve this much as epileptic as power supply is, what wouldn’t it achieve when there is adequate supply?

I am far from being complacent and desperately hate the poor power supply in Nigeria but the modest achievements in the present hostile business environment deserve some commendation.

While it is true that Kenya is the regional IT hub in East Africa, Nigeria is the IT hub of a much bigger regional block (West Africa). In summary, Kenya does not beat Nigeria in the Internet business arena. It is a good thing that Africa gets more Internet connectivity but if there is any country to pitch against Nigeria in Africa, it is certainly not Kenya.